An Alitalia Airbus A319-100

DPA | 06 May, 2008
The European Commission has told Italy to respond within 14 days to its questions on the multimillion-euro government bailout for Italian carrier Alitalia.

The authorities in Brussels, which doubt the regularity of the 300 million euros ($464 million) in credit extended to the ailing airline, have given Rome a May 19 deadline to respond, officials in the office of Transport Commissioner Jacques Barrot said Monday.

The commission had said previously that it was possible that the bailout could be considered a government subsidy, which is banned in the EU.

The Italian government told the commission of the loan some 10 days ago and made assurances that it was a standard loan and normal market practice.

"The information we have at the moment leaves many questions open," a commission spokesman said.

It could be a case of illegal government subsidy if, for example, a company that is no longer considered creditworthy on the open market receives a loan.

Rome gave Alitalia the loan to keep the company afloat after Air France pulled out of an offer to buy it.

Under EU rules, Alitalia - which was granted a government bailout in 2001 - cannot be given more state aid until 2011.

However, the current loan would not be classed as "state aid" if it were offered at competitive commercial rates, EU officials said last week.